Deductible costs in CGT
Can legal fees reduce our CGT?
The situation
Incidental costs of acquisition and disposal, such as legal and valuation fees, can be deducted in computing the gain.
The law
- Secs 65E and 65F and Part XXI of Schedule 1, Income Tax Act 1967: Capital gains tax on disposal of unlisted shares: 10% of gain, or 2% of gross price for shares bought before 1 Jan 2024
What it means for you
Keep invoices for these costs. They reduce the gain only under the 10% method. The 2% method uses the gross price. Under the 2% option, no costs are deducted because the base is the gross price. That is why the comparison should be done after costs are counted.
What to do
- List incidental costs.
- Keep invoices.
- Deduct under the 10% method.
- Compare with 2%.
We can do this for youCapital gains tax on disposal of unlisted shares: MYR 2,000